Definition of Governmental Authority amended for exemption from Service Tax

Definition of Governmental Authority amended for exemption from Service Tax

Notification No. 02/2014-ST dated January 30, 2014 (“the Notification”) has amended the definition of Governmental Authority as provided under clause (s) of Para 2 of the Mega Exemption Notification No. 25/2012-ST dated June 20, 2012 as under:

(s) “Governmental authority” means an authority or a board or any other body;

(i)  set up by an Act of Parliament or a State Legislature; or

(ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution.

Earlier, the “Governmental authority” was defined as under:

“Governmental authority’’ means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W  of the Constitution.

This change is effective from 30^th January, 2014.

Point to note:

This amendment has expanded the definition of “Governmental Authority” and widens the exemption base for service tax to be provided even to an authority or a board or any other body, set up by an Act of Parliament or a State Legislature without a condition of established with 90% or more participation by way of equity or control by Government.

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Bimal Jain
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